Kachikwu/Baru feud raises fresh turmoil in oil sector
The friction between the Minister of State for Petroleum Resources, Ibe Kachikwu and Group Managing Director of the Nigeria National Petroleum Corporation (NNPC) Maikanti Baru has raised fresh worries among stakeholders in the country’s oil sector that has been struggling to recover from the crash in oil price and militant attacks.
Indications emerged over the week that all has not been well with two of the most important men in Nigeria’s oil sector, following a memo by the minister to President Muhammadu Buhari.
In the letter Kachikwu alleged that the NNPC boss had repeatedly sidelined and disrespected him and the NNPC board.
For instance, the NNPC had on August 29, 2017 announced major appointments and redeployments but the minister, who chairs the NNPC board, complained in the letter that the board, was never briefed about the appointment or redeployment.
“Members of the board learnt of these appointments from the pages of social media and the press release of NNPC,” he said in the letter.
Kachikwu in the letter also alleged that Baru also sidelined the NNPC board in the awards of contracts. According to the minister, the legal requirement was that all contracts above $20 million be reviewed and approved by the NNPC board.
He told the president that in over one year of Baru’s tenure as the GMD of NNPC, no contract has been run through the NNPC board.
The minister listed major contracts awarded by Baru without the input of the NNPC board to include $10 billion crude term contracts; $5 billion direct sales direct purchase (DSDP) contracts and $3 billion Ajaokuta-KadunaKano (AKK) gas pipelines contract.
Others were the financing allocation funding contracts worth $3 billion and NPDC production service contracts valued at $3-$4 billion which cumulatively amounted to $25 billion. Beginning of the problem It seemed all was well, at least from their appearance at public events, in the last one year.
But the minister’s memo to the president which found its way to social media was the most credible pointer to the fact that both men have had axe to grind in last one year.
Kachikwu in his letter opened up that his working relationship with Baru has been “fraught with humiliation, sidelining and campaigns of character defamation.”
In the letter to the president, the minister accused the NNPC boss of labeling him as “corrupt”, “anti-North,” and also being “in collusion with militants”, in order to convince the president on the need to sideline him in the decisionmaking process in the NNPC.
The minister further alleged that when he called for meetings, Baru would send his subordinates without the courtesy of a call to explain his absence.
He said he had managed the bad perception created by Baru’s blatant insubordination and disrespectful attitude and had also worked hard to avoid being seen as petty and meddlesome.
Other accounts of how both men fell apart had it that ever since Kachikwu was first appointed GMD of NNPC in 2015 and subsequently the minister of state, there’s been no love lost between him and Baru.
While Kachikwu served as NNPC GMD from August 2015, Baru’s name always popped up as his possible replacement. Stories were erratically published online and attributed to Baru alleging that Kachikwu had been removed.
But in a shock restructuring exercise at the NNPC in March 2016, Mr.Baru was redeployed by Kachikwu from his position then as NNPC’s Group Executive Director (Exploration and Production) to the petroleum ministry as Technical Adviser Upstream to the minister.
Baru was, however, returned as NNPC GMD on July 4, 2016 by President Buhari while Kachikwu was named as the chairman of the NNPC board.
Immediately after succeeding Kachikwu, Baru was reported to have jettisoned some of Kachikwu’s initiatives while pursuing his own.
A source familiar with these developments told Daily Trust on Sunday in confidence that, “Restructuring the NNPC was actually started by Kachikwu when he was the GMD.
When Baru came in, he continued with the restructuring but in his own way. The consultants brought in by Kachikwu for the reorganisation exercise were disengaged. I think that was the beginning of the problem between the minister and the GMD.”
A board member of the NNPC, who also spoke on the matter, said that it became a serious embarrassment to the board when members read the minister’s petition in the social media
“You cannot rule out scheming in the board of any agency or parastatals and that’s exactly what is happening in NNPC.”
“All of us in the board are disappointed with the apparent misunderstanding between the minister and the GMD. Yes, there are issues relating to poor communication and consultation. But then, these are issues that ought to have been resolved. Reactions trail feud The face-off between the two officials has drawn reactions from civil society groups, local and international transparency watchdogs as well as well-meaning Nigerians.
While the Presidency or the GMD is yet to clear the air on the allegations, the Senate during the week raised a committee to probe the allegations of insubordination and unapproved award of $25 billion contracts by Baru.
While the Peoples Democratic Party (PDP) called on the president to suspend Baru immediately human rights advocacy group, Socio-Economic Rights and Accountability Project (SERAP) demanded that Baru be also referred to anti-corruption agencies for probe and possible prosecution.
President of the Nigeria Labour Congress (NLC), Ayuba Wabba advised Buhari to ensure a proper investigation of Kachikwu’s allegation.
The lawmaker representing Kaduna Central Senatorial District in the National Assembly, Senator Shehu Sani, however asked the President to appoint a substantive minister of petroleum resources.
Also during the week, PanYoruba socio-cultural group, Afenifere, while adding its voice to the ongoing controversy said that if the claims by the minister were true, “it confirms our position that the architecture of corruption is intact in spite of our anticorruption crusade.” Implication for industry Industry operators and stakeholders are concerned about the negative perception and grave consequences the misunderstanding between the minister and the GMD could have on Nigeria’s oil sector.
Kachikwu was due to announce the flag off of the marginal bids licensing round any moment from now but analysts said that local investors might show apathy towards the exercise because of transparency concerns.
“This altercation might possibly erode the successes in the oil sector. Remember the crisis we went through when the oil price crashed; but Nigeria was able to find its way at OPEC. At present, fuel price is gradually coming down. I hope this problem would be resolved quickly,” the NNPC board member said.
The Independent Petroleum Marketers Association of Nigeria (IPMAN), apparently concerned that the news of current dispute might stoke fears of panic buying and rumours of fuel scarcity, has warned against attempts to scuttle the achievements already recorded in the downstream oil sector.
IPMAN in a statement signed by its National Secretary Danladi Garba Pasali, said the group whose members own the highest distribution outlets across the country considered the minister’s accusation of the NNPC GMD as “very ridiculous”.
The Senate committee member on Niger Delta, Gas and Petroleum Downstream, Senator Foster Ogola ( Bayelsa West Senatorial District) told Daily Trust on Sunday that as a result of the current dispute, the legislators were working to provide legislative backing (through the Petroleum Industry Governance Bill) that will guarantee harmony among institutions in the sector.
“If there is anything wrong there (in the oil sector), you have the president who is the proper minister of petroleum he should be able to stand in and call a spade a spade, that is what is not happening, ” Ogola said.
Also reacting to the development, the Africa Network for Environment and Economic Justice (ANEEJ), called on the National Assembly to pass the Petroleum Industry Governance Bill (PIGB) so as to avert further confusion.
ANEEJ Executive Director Rev. David Ugolor in a statement said that President’s response would define the perception of the reforms which have been going on in the oil sector.
“We believe that the inconsistencies being thrown up by the startling revelations from the minister include some of the issues which the PIGB seeks to address and redress’, Ugolor said.
“ANEEJ anticipated this rift and eager to forestall the present rift between principal actors in the Nigerian oil sector, and act as catalysts for the passage of the PIGB, ANEEJ wrote an online petition,” for the government to act fast.